New Mexico's Unemployment Tax and Claims System Reduces Fraud and Overpayments

The new system emphasizes 'self-service' for claimants and employers -- the application can be accessed by Web and telephone.

New Mexico's new Unemployment Insurance tax and Unemployment Claims systems have emerged from a troubled rollout with some good news.

New Mexico Gov. Susana Martinez announced Jan. 8 that the state's new integrated Unemployment Insurance systems reduced fraud in Unemployment Insurance (UI) by as much as $10 million, or 60 percent, and reduced improper payments to less than 8 percent for 2013 -- from fourth highest in the nation for improper payments in 2011, down to 26th highest in 2013.

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“When I took office, more taxpayer dollars were being wasted on improper payments and fraud in unemployment insurance than in nearly any other state in the country," said Martinez, touting the state's new accountability and accuracy.

A report to the Legislative Finance Committee detailed the many challenges encountered in the $48 million project, including an incomplete RFP requiring contract modifications, difficulties in changing both UI tax and UI claims systems simultaneously, and federal requirement changes during the project.

The fact that the project faced challenges isn't surprising, said Todd Sander, executive director of the Center for Digital Government, a government-focused research and advisory organization. (The Center for Digital Government is owned by e.Republic Inc., which also owns govtech.com.)

"Public-sector core business systems are very complex, and efforts to modernize them often uncover things that prove to be more complicated than orginally anticipated by the government or industry," Sander said. "I think this system is a good example of the state and its contractors staying focused on the end game, and that has allowed them to realize significant benefits for taxpayers."

The project, contracted to Deloitte Consulting, Kemtah and ACRO, collects unemployment tax information from employers, and processes UI claims and benefits, according to the state. Replacing an outdated version, the new system provides self-service functions for claimants and employers, where the application can be accessed via the Web or telephone.